Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the SeSa Group nine months consolidated results as of January 31st, 2022 conference call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star and zero on their telephone. At this time, I would like to turn the conference over to Ms. Conxi Palmero, IR Manager of SeSa. Please go ahead, madam.
Good afternoon to everyone. I welcome you to SeSa Group financial presentation regarding nine months consolidated results as of January 31st, 2022. On behalf of SeSa, participating myself, Investor Relations Manager, and Alessandro Fabbroni, Group Chief Executive Officer. In the late morning, we made available our conference presentation on the sesa website under Investor Relations section that we can follow during the conference call. Today, our board approved nine months consolidated results as of January 2022, reporting again an outstanding set of economic and financial results in each group sector with record operating cash flow. Alessandro will introduce the key points of our presentation.
Hi, everybody, and thanks for joining our call disclosing the nine months outstanding consolidated results that confirm again great strategy of our group based upon continuous investment and development of human resources and skills in order to support digital services and business model evolution. On the industrial side, we develop our digital skills. We consolidated at the end of January the line of 4,000 human resources, up by 20% year-on-year. We confirm the accretive setup of Business Services new group sector that in full year 2022 is achieving around 600 employees and EUR 65 million revenues, targeting a 12% EBITDA margin that we already achieve in the period under review, and targeting around EUR 100 million revenues in the full year 2023.
We continue to improve also our portfolio of about 30,000 customers, of which 3,000 abroad, mainly in DACH area. On the economic and financial side, in the nine-month period, we reported outstanding economic and cash flow generation results. The profitability growth rates were higher 35% at the EBITDA level and over 43% at adjusted net profit level with strong set of results again in the Q3 only. That means the period between November to January, with quarterly revenues up by 12.5% and 38% operating profit increase in the only Q3, despite market growth deceleration in last months and weeks.
In the nine-month period, group revenues at consolidated level achieved EUR 1.8 billion, up by around 15% year-on-year, with over 13% increase in VAD sector, 18% improvement in system integration sector and around 25% growth in business services sector. Group EBITDA reach around EUR 125 million, up by 35% year-on-year, with an EBITDA margin around 7.10%, up about 110 basis points compared to 6% as of January 2021. Thanks to positive contribution of all group sectors, VAD EBITDA increased by 38%, mainly driven by digital growing business unit, with an EBITDA margin equal to around 5% compared to 4% of the previous year.
System integration EBITDA was up by 27%, with an EBITDA margin equal to around 12.10% compared to 11.20% of the last year. While business services sector EBITDA, as I mentioned before, achieved a growth by around 200% with an EBITDA margin equal to 11.6% compared to around 5% of the last year. Bottom line, group adjusted earnings after taxes achieved EUR 62.2 million, up 43% year- on- year, with an EAT margin of revenues equal to 3.5% compared to 2.8% of the previous year. Thanks to group growing focus on digital services and recurring revenues business model, we reported also a strong improvement in our cash flow generation. Achieving an operating cash flow equal to about EUR 130 million over the last 12 months.
Net financial position as of January 2022 was active, that means net liquidity for EUR 178 million compared to around EUR 100 million as of January 2021. While net financial position reported, that means net of EUR 147 million of IFRS liabilities, was active for EUR 30 million compared to EUR 11 million as of January 2021. That reflects the around EUR 130 million operating cash flow, net of EUR 90 million of investment, and net of EUR 20 million of dividends and buyback plan over the last 12 months. In the nine months period under review, we continue to enlarge our perimeter of operation, not only in terms of human resources through internal hiring, but also through several strategic bolt-on M&As. The external line contributed to our group growth by around 55% at the operating profit level.
We underline, in particular, 15 relevant M&As closed in calendar year, so that means from January to December 2021, with a combined contribution expected in fiscal year 2022 equal to EUR 160 million revenues with a 12% EBITDA margin. Also the last two M&As that we closed in February 2022 with a 20% accretive EBITDA margin and welcoming 170 new human resources. Under very positive trend of our performance and scenario, I give again the floor to Conxi, who will provide, as usual, some updates about our M&A programs and pipeline.
Thank you, Alessandro. Yes, in the period under review, we boosted our M&A investments, contributing by 55% to operating profit growth and confirming our strong capability to deliver quick and efficient integration of the companies acquired across all the business sectors. In our calendar year 2021, we closed 16 M&As, with contribution expected in fiscal year 2022 equal to EUR 160 million of revenue and EBITDA margin equal to 12%, onboarding 550 new employees. Since January 2022, we announced two more acquisitions with total contribution expected in the fiscal year 2023 equal to EUR 20 million revenue, with high accretive EBITDA margin near 20%, onboarding 170 new human resources.
Among the main corporate acquisitions, I underline in the value added sector, on May 21, I remind you, we acquired the majority stake of P.M. Service focused on Digital Green solutions. After the acquisition day, the company is really overperforming quarter after quarter and targeting annual revenue equal to EUR 120 million, with high accretive EBITDA and over 1,000 customers in the fiscal year 2022. On September 21, we acquired the majority stake of Commit with a customer set of 2,500 business partners, an annual turnover of around EUR 50 million, with an EBITDA margin equal to 5% and a wide coverage of mobile enabling communication services. On Software and System Integration sector, on May 21, we acquired the majority stake of Kallideas Group and Quence.
In Germany, we acquired a company with annual revenue equal to EUR 50 million, focused on digital engineering across Central Europe. Including this deal, we reach a total perimeter in digital manufacturing of about EUR 50 million revenue, with a pan-European organization with 250 people, mainly in the DACH area. On November 21, we acquired the majority stake of Datef, company operating in digital transformation, cloud and security solutions, with annual revenue of about EUR 50 million, enlarging our presence in Südtirol and Middle European manufacturing industries. On the 1st of March 2022, 10 days ago, we also announced a strategic partnership with Adacto, digital consulting agency focused on customers and business experience with 275 human resources, of which 25 in LATAM, EUR 5 million revenue and a EBITDA margin really accretive, near 50% that we will consolidate starting from March 2022.
In the Business Services sector, we enlarged significantly the size of operations, thanks to several industrial M&As. From May 2021, we started consolidating the three acquisitions, I remember you, in the digital platforms business unit, it means IFM Infomaster, Digital Storm and Tecnikè, with combined revenue over EUR 50 million, obviously at acquisition time, and an EBITDA margin over 25% with 100 skilled human resources. From January 2022, we consolidated A Plus and Citel, companies with combined annual revenue of EUR 6 million and double-digit margin expected, onboarding 40 new human resources and boosting the business unit of security solutions for the financial services industry. On February 2022, we also announced the acquisition of Omigrade Group, EUR 10 million annual revenue with an EBITDA margin accretive more than 12% and 100 human resources skilled in IT consultancy and development of ERP and digital for banking and industry.
Omigrade will be included in our perimeter on the consolidation of our group since March 2022. Thanks to quick and efficient integration of the last acquisition, Business Services sector is targeting for the fiscal 2022 revenue equal to EUR 75 million, with a target EBITDA margin, involving over 550 human resources, highly skilled, and targeting the top line of EUR 100 million revenue for the fiscal 2023. We will continue to attract and combine on industrial basis small mid companies with skilled human resources, keeping under control our entry value around 5x EBITDA multiple, you know, with earn-out mechanism and progressive ratio of stake acquisition to commit in the long term the key people of the target companies.
We continue to work on a strong pipeline of M&As across all sectors with accretive EBITDA margin in order to expand our double-digit growth also in the fiscal year 2023, and obviously in the long term that, you know, remain our main commitment. Now I give again the floor to Alessandro for the final conclusion.
Thank you, Conxi. In the nine-month period under review and also in quarter three only, still great growth rates, thanks to a scalable group model focused on vertical skills and able to support the strategic evolution of enterprises and organization. Again, a great trend, in particular in human resources management, with over 4,000 employees as of January 2022, and over 500 new talented people recruited in the last year. That means in the last 12 months, taking under control HR cost and the attrition rate limited to about 5% in the last 12 months, compared to 6% of the previous year. Despite growing mobility and growing gap of technical skills in the information technology industry.
Under global scenario, currently impacted by high uncertainty with market growth deceleration expected in short term, our successful strategy and business model will continue to be successful and to generate sustainable value. The last quarter of the full year 2022, we will start consolidating new strategic companies as Omigrade in Business Services sector and Adacto in system integration sector that will generate around EUR 20 million of additional revenues with a 20% accretive EBITDA margin and with around 150 new human resources. We also target to close at least one additional strategic M&A within April 30, 2022.
In the light of great nine months industrial and financial results, our increasing size of operation and positive digital market trend that we continue to expect in midterm, we confirm the very positive outlook for the full year 2022, with an increase by about 30% in operating profit. That means EUR 166 million of EBITDA in the full year as of April 30, 2022, and a growth over 35% at EAT level, targeting around EUR 80 million in the full year 2022. In a global scenario where digitalization and sustainability represent, in growing way, crucial drivers for companies and organizations, we continue to be committed on our long term growth track record, and we confirm for the full year 2023 the growth expected according to current analyst consensus. We thank you for your attention.
Now, as usual, we stay available for the Q&A final session.
Excuse me. This is the Chorus Call conference operator. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Andrea Randone with Intermonte. Please go ahead, sir.
Thank you. Good afternoon, everybody, and congratulations for the results. I got a couple of questions. The first one is if you can comment on your M&A pipeline. You several times have said that there are several companies you are constantly scouting for. But I wonder if you are targeting particular businesses, particular segments? Second question about your B Corp certification, if you can update us on this process? Related to this topic, if you can give us examples of how sustainability can become also business for SeSa? Last question is just an update on key metrics on your human capital. We know that you got a strong performance in terms of churn and retention.
If you can provide us an update and your plans for the future? Thank you.
Andrea, thanks for the questions. First of all, our M&A pipeline continues to be positive. We are confident to make target at the same pace that we had in the 2021 calendar year. That means 10-15 M&As with combined revenues of around EUR 150 million, and targeting an EBITDA margin at least double digits. The last two acquisitions that we made develop a combined EBITDA margin over 20%. In terms of sustainability, we consider that the global landscape are demonstrating that the combined transformation, so energy and transformation towards sustainability, is a parallel phase of digital transformation.
We are really confident to make the right choice when two years ago we decided to invest it in that area. We are developing EUR 140 million revenues from Digital Green with the marginality higher than the group average. We continue to stay focused not only in developing business, but also in our internal plan. In the B Corp certification program, we have completed at June 2021 the B Corp impact. The first step of assessment. Now we are working in order to deliver within 12 months the first certification. We are targeting to start by certification with several strategic companies inside our group perimeter.
The management of HR in our industry is crucial, and the performance we achieved in the last 12 months are great. The churn rate of 5%, that is declining compared to 6% of the 12 months before, is really a great performance. That is the result of several programs that we develop in HR management, welfare program, education program, and also, let me say, a result of unique group business model that is federative, focused on vertical and digital skills, and able to retain key people and all HR of our organization. Let me add scalable. We show that we are able to add size of operation and improve the churn rate performance. That means to reduce churn rate and to improve loyalty rate.
That is what we intend to do in coming quarters and in coming months. To target progressive development of our size of operation, progressive and sustainable. That means to continue to hire people inside our organization in sustainable way, so with the right pace also in terms of new human resources, new skills, in order to be able to retain and to develop in the long term, the value generation for all our stakeholders.
Thank you. Thank you, Alessandro, and again, congrats, congratulations to your team.
Thank you, Andrea.
The next question is from Aleksandra Arsova with EQUITA. Please go ahead, madam.
Good afternoon to everybody. Thank you for your presentation. A brief follow-up question on M&A. First of all, apart from the general guidance on revenues and the EBITDA marginality expected, also in terms of M&A CapEx, do you still expect around EUR 100 million in CapEx for the coming year in terms of M&A and maintenance CapEx? Then, you were mentioning a rich pipeline. As far as I understand, you still foresee the idea of bolt-on M&A, but maybe since you are increasing in size and in business, are you also thinking of something bigger maybe in the future? Also, abroad expansion.
Your pipeline involves also some other maybe acquisitions abroad, apart from, I mean, the latest one you did. I do expect the geographical expansion to go ahead. Thank you.
Thanks for the question. That is interesting in terms of in particular M&A path evolution. We continue to stay committed in our trend and strategy of bolt-on M&A. That means small, mid-size M&As scale in terms of human resources. That means the combined investments that we may have in the coming 12 months may be around EUR 100 million, which EUR 80 million in M&As and EUR 20 million in maintenance and CapEx. We are exploring also as in last 12 months M&As in German-speaking area as we did in 2021. We hope to close one to three deals across Europe.
We continue to be focused on Central Europe, so German-speaking areas, where there are a lot of small, mid enterprises, and a lot of potential synergies between our operation in Northern Italy and the size of operation we may develop in Central Europe. As of today, we are not evaluating M&As with size with different size compared to the average that we performed in 2021. The pipeline is very wide with several opportunities in any group sector, and that is positive.
The other color that I may add is that we are focusing on value-added areas of our business, so cloud computing or digital security, consultancy, with an EBITDA marginality significantly higher than the group average.
The next question is from Marco Vitale with Mediobanca. Please go ahead, sir.
Yes, good afternoon, everybody. Thank you for taking my question. I have a follow-up on the guidance. I understand that you've confirmed your target to grow by 30% your EBITDA. Looking at nine-month trend, that looks quite conservative, but it would imply growth rate in Q4. I was wondering what are the reason behind this confirmation and guidance? Is it just your approach to remain cautious? Also linked to that, what do you expect from the ongoing crisis in Ukraine, in the sense that do you expect any potential implication on IT spending on digitalization spending? Or so far, you're not concerned with this kind of issue? Thank you.
We don't expect a decline in performance in fourth quarter. We prefer to be cautious as usual. I think that our main focus must be on mid and long term instead of the last quarter of 2022. The performance we are developing after January 31st, and so also in last weeks, continue to be positive and with growing trend of revenues and also of profitability. We believe that the global landscape is reinforcing sustainability and digital transformation path of any company and organization. It's crucial in growing way the role of SeSa Group for Italian economy. In the last days, a lot of companies asked our help against cybersecurity threats and risk.
That is just one point of business development that we are progressing in these days. We are confident also to perform well in the fourth quarter and maybe to outperform the target for the full year. But I underline again, our main focus continue to be long-term, mid and long-term performance, and we stay committed in generating sustainable long-term growth. That means in full year, 2023 and also 2024.
Understood. Thank you.
Thank you for the question.
Once again, if you wish to ask a question, please press star and one on your telephone. For any further questions, please press star and one. The next question is from Hugo Mas with Sycomore. Please go ahead.
Yes. Hello, everybody. My only one question is regarding your performance in Q3 in terms of growth. I was wondering if you could explain us why we have seen this kind of slowdown in terms of growth in Q3 compared to H1, if it is only an acquisition based effect or if it is also the organic growth that decelerates? Thank you.
In Q3, revenues grew by around 13% compared to 15%, and an improvement in EBITDA by 32.7% compared to an average of around 35% in the nine months. We may consider that slight decrease in our growth pace mainly due to lower M&A impact on only Q3. We consider the new acquisitions that we are delivering may continue to perform well in the fourth quarter. The decline is not deriving from problems of ordinary business. Consider that the sector where we perform with lower growth rate compared to the consolidated growth rate is system integration.
In System Integration, the nine months period, the internal growth contributed by over 75%. The growth in System Integration was mainly organic. That means we continue to perform very well in terms of organic growth. The decrease in growth was mainly referring to the only Q3, was mainly due to lower contribution from M&As and external leverage.
Okay, perfect. Thank you.
Thank you for the question.
The next question is a follow-up from Aleksandra Arsova with EQUITA. Please go ahead, madam.
Yes. I hope I have a follow-up on the previous questions in terms of the guidance you provided actually for 2023 fiscal year, this coming year. You provided a range both for EBITDA and for net income adjusted. Can you maybe clarify and give a little bit of color on what are the drivers, let's say, leading to the lower range or to the upper part of the range? And then, in terms of the coming growth you're expecting in terms of revenue, so it's more growth related to upselling of services and, let's say, activities with existing clients, or is more driven by acquiring new clients in new businesses? Thank you.
Yes, we provide a range of target for the full year 2023 that will be impacted by the different contribution that we may have from M&As and external leverage. For example, for EBITDA, we provide the range between 14% and 20% of growth rate in full year 2023. 14% is considered with lower contribution of M&A, around 20%. While 20% growth rate represent a higher contribution of M&A, around 30%-50%. We consider our organic growth at least equal to 10%.
Deriving not only from new customer, but also from an improvement of our portfolio and the enlarging of our portfolio that we did, not only in value-added distribution with the new Digital Green business unit, but also in system integration with new lines of business in terms of consultancy, cloud, and security services.
Okay. Thank you. Very clear.
Thank you. Thank you.
For any further questions, please press star and one on your telephone. Ms. Conxi Palmero, Mr. Fabbroni, there are no more questions registered at this time.
Thank you to everyone for participate to this conference call. As always, we remain available for your additional queries, and you can contact us in order to support you in understanding our business model evolution. Have a fantastic weekend to everyone, and thank you for your time.
Ladies and gentlemen, thank you for joining. The conference is now over. You may disconnect your telephones. Thank you.